Jul. 18—In the early morning hours on Monday, Kansas City restaurateur Jasper Mirabile went on Fox News to bemoan the current labor market, where job openings far outnumber applicants.

The struggle to hire and retain staff has pushed many restaurants to raise wages. As Mirabile told Fox & Friends host Steve Doocey, workers who previously earned $20 an hour can now demand $30 or $35 per hour.

At the same time, the market is so tight that competitors are offering substantial hiring bonuses to lure away talent from his Jasper's Restaurant and Marco Polo's Italian Market.

"That's just not right, not to give them a $2,500 signing bonus some restaurants are offering. Unbelievable," he said. "And there's no way in the world in our industry we can pay those wages without raising our prices."

The conservative morning show host blamed the "vast amount of money" the federal government has given to restaurants in pandemic relief funds for the current challenges. But Mirabile didn't reveal that his own restaurant has benefited greatly from both the Paycheck Protection Program and the Restaurant Relief Fund.

Combined, Jasper's Restaurant received nearly $1 million in federal funding.

Though many restaurants said the funds were a lifeline, some people in the business question how restaurants were selected and how the grant amounts were determined. In Kansas City, the amounts varied from just over $1,000 to $10 million. And SBA data show a huge discrepancy between wealthy parts of town and the economically disadvantaged and historically Black east side.

Reached on the phone last week, Mirabile said his brother, who handled the finances of the operation, was unavailable. Pressed about his appearance on Fox News, the chef and local talk radio host said he was "not at liberty" to participate in an interview.

Jasper's Restaurant was among more than 300 in the Kansas City area to receive funds under the Restaurant Revitalization Fund, a special program aimed at helping hard-hit restaurants through the pandemic. Data released last week by the U.S. Small Business Administration show that nearly $100 million flowed to restaurants across the Kansas City metro area.

And the biggest grants went to some of the best known establishments in the area: 801 Restaurant Group, which owns fine restaurants like 801 Chophouse and Pig & Finch Gastropub, received a $10 million grant.

Q39, the second largest recipient in the area, received $4.7 million. And Overland Park's PB&J Restaurants, which operates Burnt End BBQ, Red Robin restaurants and YaYa's Euro Bistro, landed just more than $4 million.

The Star attempted to contact the top 10 local recipients. All either declined to comment on the program or could not be reached for comment.

Many also received previous support through the Paycheck Protection Program. Q39, for instance, received $3.8 million in two rounds of PPP funding.

In a statement, Rob Magee, founder and owner of the company that operates barbecue restaurants in midtown and Overland Park, said he doesn't discuss his finances.

The database shows many of Kansas City's best-known restaurants benefited from the $28.6 billion federal program. Those include Joe's Kansas City Bar-B-Cue, The Peanut, Ponak's Mexican Kitchen, The Antler Room, Ragazza Food & Wine.

The Restaurant Revitalization Fund was meant to aid hard-hit restaurants that suffered during the pandemic by matching their revenue losses. Eligible businesses could receive grants of $1,000 up to $10 million.

More than 370,000 business owners applied for the $28.6 billion available through the federal relief program. Around 105,000 businesses were approved for the grant, fulfilling fewer than a third of the grant applications.

About 600 Kansas businesses received grants totaling almost $108 million. In Missouri, about 1,100 restaurants were awarded about $283 million.

The grant program was initially meant to prioritize funding for businesses owned by women, people of color and military veterans. But after several white business owners sued, the SBA put an end to the policy and rescinded awards to nearly 3,000 priority applicants.

Across the country, 9% of the grant funds went to franchised operations.

"On the whole, the majority of these million-dollar grants are going to franchises or restaurant groups or in some cases the larger, more popular restaurants," said Liz Cook, a local freelance food writer who analyzed the Small Business Administration data.

That's not totally unexpected as the largest companies have larger budgets and potentially larger pandemic-related losses than mom and pop operations.

"It's what I expect in this kind of program," said Bill Teel, executive director of the Greater Kansas City Restaurant Association. "When the government or whoever sets about to build a one-size-fits-all kind of thing, it always seems like the big guys get more than the little guys. It always feels like there's a certain amount of inequity whether there is or isn't."

Wide divide raises questions

The $31,500 grant that LaRonda LaNear received helped keep her We Got It Covered Catering afloat.

Beginning in 2020, her four-year-old business suffered huge losses as corporate catering contracts fizzled and city leaders banned large gatherings. The grant helped cover the bills and hire staff this year.

But like the PPP funds before, the money was spent as soon as it hit her account.

"My revenue dropped significantly," she said. "It helped me a lot."

But LaNear was appalled by some of the multi-million-dollar grants awarded to other restaurants in the area.

"What? Oh my goodness," she said. "What the hell? I can't believe that."

She said that money could have been stretched further to help more small operations that lack the capital and savings of bigger businesses.

"I'm not trying to throw shade at anybody, but I feel like they're well known and they had much more business than we did during the pandemic," she said of the largest local grant recipients. "They don't need 10 million damn dollars. You could spread that out over a lot of businesses.

"I'm literally struggling right now trying to find funding... I mean come on, it's crazy."

LaNear is not surprised that the program appears to have helped relatively few minority-owned businesses. The same thing happened with PPP loans before: very few went to Black businesses here.

She said many minority-owned businesses operate informally without the requisite licensure and insurance needed for federal programs. And many already struggle with access to business lending or other resources.

"I just use Google," she said. "But a lot of people are just uneducated. And I know a lot of minority businesses operate under the radar."

Cook said the program appears to have been a marketing failure. While it was originally targeted to aid disadvantaged businesses, it apparently did not get the word out to those most in need.

Her analysis found a stark divide between grant winners with addresses east of Troost Avenue, Kansas City's historic racial and economic dividing line, and those with addresses west of Troost. On the east side, grant amounts averaged less than $50,000. Those on the west side of Troost received average grants in excess of $317,000.

With less access to banking systems, minority businesses often struggle to find capital and oftentimes mistrust institutions like the federal government.

"We really haven't made very much progress in overcoming that," she said.

Across the metro area, the amount of grants given to restaurants varied widely. While 801 Restaurant Group was among fewer than 100 in the nation to receive a $10 million award, many others received less than $30,000.

"It does look pretty odd that Q39 for example got a $5 million grant and many of the other restaurants got between $5,000 and $30,000," Cook said. "So I think you're naturally going to have questions about the distribution when that gap is so large."

Feds provide much needed relief

While some question the fairness of the program, many restaurants say the federal relief was the only thing that kept them in business through an unprecedented health crisis.

Even though restaurants are enjoying strong sales now — Jasper's in South Kansas City, for example, reported a 22% increase over 2019 sales — that doesn't make up for the damage suffered in 2020.

"This is helping them get back from those lean months," said Teel, of the restaurant association.

Between the middle of March 2020 and March 2021, the three locations of The Mixx lost a combined $3 million, said owner Jo Marie Scaglia.

The health conscious concept has a location south of the Country Club Plaza, one in Overland Park and previously operated in the Power & Light District, before closing in late 2020. Scaglia said the locations saw no breaks in rent, utilities or insurance even as sales plummeted.

"All of our expenses didn't change," she said. "The only thing that changed were our sales."

Instead of reusing dine-in plates and glassware that were previously replaced twice a year from wear and tear, The Mixx moved most of its sales to to-go orders. That pushed costs up for disposable containers, utensils and bags and delivery costs cut into profits.

Scaglia said the company spent more than $60,000 on masks, gloves, single-use towels, sanitizer, extra pens and single-use menus.

PPP funding helped The Mixx keep its prices steady even while incurring those additional costs. And the nearly $1.2 million in Restaurant Revitalization Fund grants helped catch up with some previous losses.

Scaglia's Caffetteria Modern Cafe + Marketplace in Prairie Village was not eligible for the most recent relief funds because sales actually improved during the pandemic as she pivoted to focus on family-sized meals and carry-out business.

On Friday, Democratic Rep. Sharice Davids celebrated the federal restaurant relief program, which pumped more than $46 million in relief to 165 businesses in Kansas' Third Congressional District, which includes Wyandotte and Johnson counties. But she said Congress should do more.

Davids, who serves on the House Small Business Committee, has also signed onto the Restaurant Revitalization Fund Replenishment Act of 2021, which would provide even more funding to American restaurants. Applications for the program reached $75 billion, far exceeding available funds. The replenishment act would fund another $60 billion in appropriations to the program.

Davids said small businesses "are the heart of our community, and after more than a year of challenges, they continue to need our support."

(c)2021 The Kansas City Star (Kansas City, Mo.)

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